BSP seeks waiver of Bank Secrecy Law

The Bangko Sentral ng Pilipinas (BSP) urged bankers yesterday to consider requiring depositors opening foreign currency or dollar accounts to waive their right to bank secrecy.

Meanwhile, an opposition congressman said former President Joseph Estrada cannot invoke the Bank Secrecy Law to thwart government sequestration of his dollar deposits.

This developed as the Arroyo administration stood firm on its decision to freeze an estimated $5 million held by Estrada and his wife, Luisa Ejercito, with the Citibank Virramall branch in Greenhills, San Juan despite potential legal challenges from the deposed president’s lawyers.

BSP Governor Rafael Buenaventura said the "self-imposed" regulation among the country’s commercial banks should apply to depositors opening foreign currency deposit units (FCDUs) exceeding P50 million.
Buenaventura said the waiver must be signed before a depositor agrees to open any FCDU account with a bank.

He said the waiver could be included as an amendment to the Central Bank Act pending in Congress.

Bangko Sentral officials said Congress may consider liberalizing the bank secrecy rules in the light of the new government’s efforts to determine if Estrada and his relatives and cronies have money safely stashed in FCDUs.

"We suggested to the BAP (Bankers Association of the Philippines) to implement a waiver of the secrecy rule in case a competent court or a foreign government requests for it," BSP legal counsel Juan de Zuñiga Jr. said.

He added that the absolute and confidential nature of FCDUs could be waived to prevent laundering of ill-gotten wealth, particularly those earned through drug trafficking.

Buenaventura has said the proposal to amend bank secrecy rules will help clean up the image of the country as a money-laundering haven, especially for foreigners opening accounts in local commercial banks.

Existing bank rules strictly protect deposits from scrutiny by authorities.

Zuñiga said FCDUs are beyond the jurisdiction of Philippine courts and could not be opened even if there is strong and valid reasons to open their accounts.

He said while local courts could allow the inspection of peso deposits suspected of being ill-gotten, FCDUs are shielded from all kinds of scrutiny.

Solon bats for relaxation of bank secrecy

Misamis Oriental Rep. Oscar Moreno, one of 11 prosecutors from the House of Representatives in the impeachment case against Estrada, said "the rules on confidentiality of all deposits, whether in foreign currency or in pesos, should yield to the greater interest of justice and public policy."

"This is the reason why the law allows exceptions in the guarantee of secrecy," Moreno said.

He said even foreigners keeping foreign currency deposits cannot invoke absolute confidentiality.

"There is, therefore, more reason that Filipino residents, like Jose Velarde and his cohorts, not be given that special privilege," he added.
Moreno explained that if the law is interpreted to mean that absolute secrecy is guaranteed, "that would conceal and abet wrongdoing of public officials."

"It would also contradict and undermine the country’s criminal laws and statutes against graft and corruption," he said.

The Bureau of Internal Revenue (BIR) has ordered a freeze on the $3.3-billion deposit held by Estrada with the Citibank bank Greenhills branch.

Also frozen were all bank accounts under the names "Jose Velarde" and "Kelvin Garcia" which were believed to be Estrada’s bank aliases.

At the same time, the Department of Justice banned the Estrada couple, their son San Juan Mayor Jinggoy Estrada, and 21 of their cronies and allies from leaving the country.

Newly appointed Justice Secretary Hernando Perez said the BIR issued the freeze order using as basis alleged tax liabilities of the former president.

"The BIR commissioner has the authority to order the freezing of any bank account pursuant to the Tax Reform Act of 1997 (RA 8424) based on Sections 205, 206 and 208," Perez told reporters in an interview.

The order stated that the fallen leader was "under investigation for taxable years 1998 and 1999" and "to protect the interest of the government, there is need to place under constructive restraint due properties of the aforesaid taxpayer and his wife to prevent them from dissipating, disposing or conveying their properties without authority from this office."

A lawyer for Estrada cautioned the government on the freeze order, saying it can’t seize private assets without due process.

Makati Rep. Joker Arroyo, also a member of the House prosecution team, said they were already collating pieces of the evidence they had gathered for the impeachment trial and would turn them over to the appropriate government agency.

The materials include new evidence uncovered during the trial such as testimony by key witnesses that Estrada opened a bank account under the false name "Jose Velarde" and allegedly profited from the country’s worst insider-trading and stock price manipulation scandal.

Estrada was tried by the Senate on charges of bribery, graft and corruption, betrayal of public trust and culpable violation of the Constitution.

The trial was suspended after the prosecutors boycotted it in protest over a decision by pro-Estrada senators to suppress evidence on the leader’s huge bank deposits.

The move triggered, however, a four-day popular uprising that brought about an abrupt end to the Estrada administration.

Meanwhile, Bohol Rep. Ernesto Herrera said Mrs. Arroyo has no choice but to use the full force of the law to investigate and prosecute Estrada and his cronies.

"There is a perception that if we do not run after Mr. Estrada and his cronies now, they would be emboldened to pursue extra-legal activities that could pose a threat to the country’s political stability and economic recovery," Herrera said in a statement.

He warned that Estrada and his allies could regroup politically, considering the vast financial resources they have accumulated in the last two years.

"They could, for instance, easily set aside P500 million to finance the election of 50 congressmen at P10 million each, and they would already be in a position to create trouble inside and outside Congress," the statement said.

Amnesty eyed for Chavit, et al

Herrera endorsed a proposal to grant amnesty to Ilocos Sur Gov. Luis "Chavit" Singson and other key prosecution witnesses in the aborted impeachment trial.

Herrera said Singson, his employees Carmencita Itchon and Emma Lim, and Equitable PCI Bank senior vice president Clarissa Ocampo, among others, deserve amnesty and absolute immunity from possible criminal charges.

Herrera said the amnesty would set a positive example for future whistle-blowers in cases involving graft and corruption and other violations of the Penal Code by high public officials.

In another development, communist rebel leader Jose Ma. Sison urged Estrada and his cronies to surrender their ill-gotten wealth to the government.

"Estrada and his cohorts should be held accountable for plundering our public coffers. His cronies should also be punished for virtually crippling the economy by evading their taxes as what tycoon Lucio Tan did," Sison said in a statement.

He said the National Democratic Front which he heads will continue its "critical alliance" with the Arroyo administration, provided she prosecutes Estrada, the Marcoses and big cronies, as well as reverse the "anti-national and anti-people policy of liberalization, privatization and deregulation, among others."

On the other hand, the Volunteers Against Crime and Corruption (VACC) led the formation of an alliance of various non-government organizations aimed at going after the alleged ill-gotten wealth of Estrada and his family and cronies.

The umbrella organization, called Alliance to Follow-up Ill-Gotten Wealth (AFIL) is composed of the Graft-Free Philippines Inc., Kongreso ng Manggagawa sa Publikong Sektor, the National Council of Women in the Philippines, the Mindanao Alliance, CLAMOR and Aklas Pilipino.

VACC chairman Dante Jimenez said the AFIL aims to monitor the cases filed by various organizations against Estrada and his cohorts before the Office of the Ombudsman. — With reports from Perseus Echeminada, Delon Porcalla, Mike Frialde